Brandon McNaughton is founder and chief technology officer of Life Magnetics, the first startup tenant to take advantage of University of Michigan's new business incubator.

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Kenneth Nisbet, executive director of University of Michigan's Technology Transfer Office, is leading a new business incubator for start-up companies.

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In December 2010, the University of Michigan turned an old Pfizer campus into the Venture Accelerator, its first official effort to create a full-service facility to foster entrepreneurship and churn out new businesses. The goal was to get away from the "cheap space" idea that had defined the university's earlier business-incubator efforts and instead to focus on providing services, leveraging the university's $1.24 billion worth of research into technology and business opportunities for the venture community. The new campus—spread over 30 buildings and 16,000 square feet on 174-acres—allows the university to keep its start-ups in one (sort of sprawling) place, with access to the "world-class" laboratory, office, and wet-lab space Pfizer left behind. The university's previous venture effort generated 11 start-ups last year, and the new facility is expected to develop even more success stories going forward. Kenneth Nisbet, executive director of the university's Office of Technology Transfer, talks about how the accelerator got started, and what it could mean for the economy of the region as a whole.

What difference does the new space make?We've seen lots of people struggle when they focus too much on the real estate. We really wanted to focus on the services, access, and other connections to resources and talent. We saw the acquisition of the [Pfizer] space as a wonderful opportunity to take a space the university was going to have anyway and to bring in these private companies adjacent to us and leverage what we had already built—which was this venture center concept of surrounding them with great accelerator services and the talent to really move them forward. It was like the last piece.

Do you see a pattern to the kind of businesses you're working with?A lot of it comes from the research strengths of the kind of technology opportunities that we have here, but it is influenced by the industries and the natural resources here, too. We have done a lot of automotive research, and the discoveries that come out of here are somewhat transportation-oriented. We're extremely strong in some of the clean-tech areas that blend in with also some solar areas.

How do the start-ups in the accelerator space get along? How much do they help one another?We made a decision because of the scale of the operation here, we thought it was important to have a diverse set of technologies. We actually have a lot of device and life-science companies, but we thought there'd be some advantage to integrating some manufacturing, some clean tech, and even some software and health-services companies here. There's been a couple of cases already where a company has been able to provide some services for another company. There's been knowledge sharing about issues of obtaining talent, using some common outside vendors, just trying to have access to some venture partners, the common guidance that's coming from the venture center resources around them. Having this diverse set of entrepreneurs and businesses models that aren't necessarily close to each other, it still made a lot of sense to have them in one community so that they could learn from each other and have access to all these common resources.

Do you find you still have to convince people that southeast Michigan is a good place to be?There's probably always a bit of that because it's actually more of a Midwest thing: You're not located in Boston or Palo Alto, and therefore it's not the density of opportunities. It's lessened now because for one we're extremely fortunate that Michigan has such a sterling academic reputation and a great research reputation. Because of that people have long known that the technology kernel of these opportunities is pretty sound and the talent surrounding it is pretty high quality.

"I'll be honest: I think the economical distress of the last decade has made everybody a little hungrier and maybe even a little friendlier."—Kenneth Nisbet, University of Michigan

How do you recruit talent?Recently, brick by brick we've built these relationships with entrepreneurial talent. We started by cultivating the local community with a small but very good venture community that has been a major partner. We reached out, leveraging the alumni connections of people that had U of M loyalty and were well-placed in some firms like Kleiner. We've had some really nice exits with some of our start-ups over the past four or five years, so I think that growing reputation is diminishing the disadvantage of being in the Midwest. We're lucky in Ann Arbor because the region, the university and Ann Arbor itself have national reputations of excellence, so that plays in our favor. But it always can be improved. We're not in a dense urban area so we have to try a little harder to get the results that we're looking for.

Do you feel a connection with the broader tech-led resurgence happening in Detroit?Absolutely. Through university connections, we play a kind of strong partnership role with Wayne State in particular, and they have Tech Town there, which is broader than just Wayne. We're expanding even further: Michigan state, Michigan Tech, there's a number of universities. We are by far the biggest, but because of the resources and advantages we have here, we're reaching out and trying to help them, and they help us too.

Secondly, in the community standpoint, we play a close role with a series of community economic groups. In our case we have a group called Ann Arbor SPARK. Universities are pipelines of talent and opportunities into those sectors. They also service the community, so any entrepreneurial ideas that would come out of someone who spun out of a company or something that just made it up on their own, we help them we work on their board, we supply them talent, we're attracted resources for them as well.

I'll be honest I think the economical distress of the last decade has made everybody a little hungrier and maybe even a little friendlier. We're all kind of pitching in and helping each other, and the results have been pretty amazing.

This interview has been edited and condensed.

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